What Awaits Dow Jones ETFs Ahead of Big Earnings Releases?

A few big components of the Dow Jones will start releasing their quarterly numbers this week. The outlook is pretty bullish this time thanks to economic improvement and broad-based positive sentiments regarding earnings. Let’s delve into the earnings potential of the big six Dow Jones companies that could drive the performance of the index ahead.

According to our methodology, a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) when combined with a positive Earnings ESP increases our chances of predicting an earnings beat, while companies with a Zacks Rank #4 or 5 (Sell rated) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Microsoft

Microsoft MSFT is expected to release its earnings report on Oct 26 after market close. It has a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%. The stock saw no earnings estimate revision over the past 60 days for the September quarter and its earnings surprise history is strong. It delivered an earnings surprise of 16.94%, on average, over the past four quarters. Microsoft is expected to report substantial earnings growth of 13.19% from the year-ago quarter. Revenues are expected to increase 18.1% year over year.

Apple

Apple AAPL, slated to report on Oct 28 after market close, has a Zacks Rank #3 and an Earnings ESP of +5.69%. The stock, however, did not see any movement in earnings estimate revisions in the past 60 days. The Zacks Consensus Estimate represents substantial year-over-year earnings growth of 68.49% and revenue growth of 32.13%. Apple’s earnings surprise history is impressive, with an average beat of 23.74% for the last four quarters. Additionally, the stock has a top Growth and Momentum Score of A.

Caterpillar

Caterpillar CAT has a Zacks Rank #3 and an Earnings ESP of negative 5.05%. It saw downbeat earnings estimate revision of a penny over the past 30 days for the to-be-reported quarter and its earnings are expected to grow 68.66%. Its earnings surprise track over the past four quarters is good with the beat being 29.92%, on average. Revenues are expected to grow 27.22% from the year-ago quarter. The company will report before the opening bell on Oct 28.

Coca-Cola

Coca-Cola KO is expected to release its earnings report on Oct 27 before market open. It has a Zacks Rank #3 and an Earnings ESP of +0.75%.  There was no movement in earnings estimate revision in the past 90 days. The current Zacks Consensus Estimate for the yet-to-be reported quarter indicates decent earnings growth of 5.45% from the year-ago reported figure. Revenues are expected to increase 10.85%. Coca-Cola delivered an earnings surprise of 16.54%, on average, in the last four quarters.

McDonald's

McDonald's MCD, slated to report on Oct 27 before market open, has a Zacks Rank #3 and an Earnings ESP of -0.25%. The stock saw positive earnings estimate revision of 2 cents over the past 30 days for the September quarter. The Zacks Consensus Estimate represents substantial year-over-year earnings growth of 10.81% and revenue growth of 11.18%. Earnings surprise history is moderate, with an average beat of 7.51% for the last four quarters.

Boeing

Boeing BA, slated to report on Oct 27 before market open, has a Zacks Rank #3 and an Earnings ESP of -76.97%. The stock saw steep negative earnings estimate revisions in the past 30 days from 12 cents of gain to 14 cents of loss a share. The Zacks Consensus Estimate, however, represents substantial year-over-year earnings growth of 89.93% and revenue growth of 15.73%. Earnings surprise history is downbeat, with an average negative surprise 146.4% for the last four quarters.

However, we consider Boeing’s case as a one-off situation given its longstanding crisis with the Max 737 grounding. Since the company will take time to recover fully from the crisis, such upheaval in the earnings surprises and ESPs are likely for Boeing.

What’s Ahead for Dow Jones ETFs?

The index hit an all-time high on broad-based optimism. News of vaccine booster shots, the holiday season and an oil rally could boost the index even more in the medium term, no matter what the above-discussed companies come up with.

MSFT (5.70%), MCD (4.40%) and BA (3.93%) get a position in the top-10 list of the index. CAT (3.70%), AAPL (2.74%) and KO (1%) have a decent say on the index. If ESPs are of any guide, the Dow Jones is likely to have a moderate week on the earnings front.

Therefore, investors seeking a momentum play, can bet on SPDR Dow Jones Industrial Average ETF DIA, which has a Zacks Rank #2 (Buy), Invesco Dow Jones Industrial Average Dividend ETF DJD, carrying a Zacks Rank #3 (Hold) and iShares Dow Jones US ETF IYY, with a Zacks Rank #2. Investors can also settle for leveraged Dow ETF plays as long as the trend favors them. Here, ProShares Ultra Dow30 DDM and ProShares UltraPro Dow30 UDOW are a couple of choices.

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The Boeing Company (BA) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Caterpillar Inc. (CAT) : Free Stock Analysis Report
 
CocaCola Company The (KO) : Free Stock Analysis Report
 
McDonald's Corporation (MCD) : Free Stock Analysis Report
 
SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
Proshares Ultra Dow30 (DDM): ETF Research Reports
 
Invesco Dow Jones Industrial Average Dividend ETF (DJD): ETF Research Reports
 
iShares Dow Jones U.S. ETF (IYY): ETF Research Reports
 
ProShares UltraPro Dow30 (UDOW): ETF Research Reports
 
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